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US Session: Pound Powers Higher After BoE Minutes
October 21, 2009 6:12 PM CEST
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G10 Advancers and Decliners vs USD |
| | SEK | 1.66 |  | | | GBP | 1.37 | | | | NZD | 0.99 | | | | NOK | 0.89 | | | | CAD | 0.76 | | | | CHF | 0.52 | | | | DKK | 0.45 | | | | AUD | 0.40 | | | | EUR | 0.39 | |  | JPY | -0.29 | |
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Global Indexes |
Current Level |
% Change |
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| FTSE 100 Index | 5'252.69 | + 0.18 | | DAX Index | 5'836.14 | + 0.42 | | SMI Index | 6'434.66 | + 0.11 | | S&P 500 Index | 1'096.86 | + 0.53 | | DJIA Index | 10'076.17 | + 0.35 | | Nikkei 225 Futures | 10'280.00 | - 0.48 | | Hang Seng Futures | 22'289.00 | - 0.21 |
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World Markets |
Current Level |
% Change |
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| Gold | 1'059.33 | + 0.39 | | Silver | 17.69 | + 1.09 | | VIX | 20.24 | - 3.16 | | Crude wti | 80.57 | + 1.83 | | USD Index | 75.06 | - 0.67 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Trade balance, bn JPY Sep | 620.8 | 183.3 | JPY/23:50 | | Thu 22 Oct | - | - | - | | Real GDP, % y/y Sep | 9.0 | 7.9 | CNY/02:00 | | All industry index, % m/m Aug | 0.4 | 0.5 | JPY/05:30 | | Trade balance, CHF bn (nsa) Sep | 1.7 | 1.7 | CHF/06:15 | | Riksbank Interest Rate announcement Oct | 0.25 | 0.25 | SEK/07:30 | | Unemployment rate, % Sep | 8.3 | 8.0 | SEK/07:30 | | Current account, € bn (sa) Aug | 4.5 | 6.6 | EUR/08:00 | | Retail sales, % m/m (y/y) Sep | 0.5 (2.8) | 0.0 (2.1) | GBP/08:30 | | Government debt/GDP ratio, % 2008 | 69.3 | 69.3 | EUR/09:00 | | Retail sales, % m/m Aug | 0.4 | -0.6 | CAD/12:30 | | Initial jobless claims, thous 17-Oct | 515 | 514 | USD/12:30 | | Continuing Claims, thous 10 Oct | 5960 | 5992 | USD/12:30 | | Leading indicators, % m/m (y/y) Sep | 0.8 | 0.6 | USD/14:00 |
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Currency Tech |
EURUSD
R 2: 1.5346
R 1: 1.5030
CURRENT: 1.5010
S 1: 1.4876
S 2: 1.4842
GBPUSD
R 2: 1. 6800
R 1: 1.6740
CURRENT: 1.6605
S 1: 1.6221
S 2: 1.6127
USDJPY
R 2: 92.50
R 1: 91.80
CURRENT: 91.05
S 1: 89.70
S 2: 88.59
AUDUSD
R 2: 0.9475
R 1: 0.9345
CURRENT: 0.9275
S 1: 0.9115
S 2: 0.8985
USDCAD
R 2: 1.0650
R 1: 1.0560
CURRENT: 1.0405
S 1: 1.0240
S 2: 1.0129
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Market Brief |
Pound Powers Higher After BoE Minutes
The stand-out performer on the day has been GBP as the BoE Minutes indicated a unanimous 9-0 vote in favour of maintaining levels of QE at 175bn. The accompanying statement showed the MPC saw no compelling reason to change the bond plan for now, but added the November meeting would provide an opportunity to assess more fully (referring to the availability of the quarterly Inflation Report). GBPUSD rocketed from 1.6470 to 1.6605, and over the course of the afternoon managed to grind further to highs of 1.6635. The move was also supported by comments from BoE Governor Mervyn King who wrote in Scotland’s Herald newspaper that Britons “would be wise to take account” of the prospect of rising borrowing costs; interpreted as unexpectedly hawkish rhetoric from the central banker.
At the top of the US session Morgan Stanley released its earnings; posting its first quarterly profit for a year and beating EPS estimates (38c vs. 30c exp.). Yahoo and Wells Fargo also produced good results which fuelled equity markets higher and began yet another slump in the USD – the DXY slipped from 75.50 to hit fresh lows of 75.06. In parallel, EURUSD finally tipped above the 1.5000 level for the first time since Aug 08. So far, the pair has tentatively traded up to 1.5018 but the move has lacked much impulsiveness as investors remain wary of any false breaks caused by stop-hunters. Gold is finding some relief from the USD sell-off, but has thus far met some resistance around the previous $1060 support level (currently $1059.50); perhaps another sign that the gold-EURUSD correlation may be weakening. Meanwhile silver has regained a foothold above $17.60 ($17.70 last).
Tomorrow’s data calendar is much busier with the Riksbank announcing interest rates, Swedish Unemployment, UK Retail Sales, Canadian Retail Sales and US Leading Indicators all potentially market-moving events.
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European Session: Dovish BoC Disappoint Bulls, But RBNZ Turn Hawkish
October 21, 2009 8:50 AM CEST
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G10 Advancers and Decliners vs USD |
| | NZD | 0.44 | | | | GBP | 0.19 | | | | JPY | 0.10 | | | | SEK | 0.06 | | | | CAD | 0.05 | | | | CHF | 0.01 | | | | DKK | 0.00 | | | | AUD | 0.00 | | | EUR | -0.04 | | | NOK | -0.11 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 10'333.39 | - 0.03 | | Hang Seng Index | 22'353.58 | - 0.14 | | Shanghai Index | 3'077.30 | - 0.23 | | FTSE 100 Index | 5'243.40 | - 0.72 | | DAX Index | 5'811.77 | - 0.70 | | SMI Index | 6'427.29 | - 0.14 | | S&P future | 1'086.80 | - 0.24 |
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World Markets |
Current Level |
% Change |
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| Gold | 1'056.07 | + 0.08 | | Silver | 17.47 | - 0.14 | | VIX | 20.90 | - 2.75 | | Crude wti | 78.72 | - 0.51 | | USD Index | 75.52 | - 0.06 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| BoE MPC minutes, vote | 9-0 | 9-0 | GBP/08:30 | | CBI industrial trends, total orders, Oct | -40 | -48 | GBP/10:00 | | Fed Beige Book Released | - | - | USD/18:00 |
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Currency Tech |
AUDUSD
R 2: 0.9475
R 1: 0.9345
CURRENT: 0.9250
S 1: 0.9115
S 2: 0.8985
USDCAD
R 2: 1.0650
R 1: 1.0560
CURRENT: 1.0500
S 1: 1.0240
S 2: 1.0129
EURJPY
R 2: 137.87
R 1: 136.10
CURRENT: 135.45
S 1: 133.33
S 2: 132.25
USDMXN
R 2: 13.330
R 1: 13.175
CURRENT: 13.035
S 1: 12.767
S 2: 12.620
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Market Brief |
Dovish BoC Disappoint Bulls, But RBNZ Turn Hawkish.
The NZD found itself back above the 0.7500 level against the USD on comments from RBNZ Governor Alan Bollard that the strength of the currency was not an impediment to raising rates. The NZ stock index was down a percent overnight, as the comments appear to lend credence to speculation that the central bank will drop its dovish bias at the next meeting on 28 Oct. Bollard was previously quoted on 10 Sep as saying he did not expect rates to rise until “the latter part of 2010”, but since then improved Retail Sales and heightened quarterly inflation figures have materialized which have caused many to suspect a change of stance was likely. The other main news headlines from the Asian session were the disappointing earnings figures from China Mobile and China Telecom, but on the whole Asian equity indices are only modestly lower on the day.
Yesterday’s key events were US PPI and Housing data along with the BoC Rate Meeting. After weaker than expected PPI figures (-0.6% MoM vs. 0.0% exp.), poor Housing Starts (590k vs. 610k exp.) and Building Permits (573k vs. 595k exp.), the risk appetite trade pared back slightly and allowed the USD to regain a footing. The move was then amplified after the dovish BoC statement where the BoC clearly shut the door on any suggestions they might bring forward their schedule for tightening monetary policy, reiterating that rates would remain at 0.25% throughout 2010. This caused USDCAD to fly higher, taking out stops through 1.0440 and testing the resistance at 1.0520 whilst dragging most other major currencies lower against the USD with it. With the move lower in EURUSD, gold slumped through $1060 and proceeded to take out stops down to $1052.50 levels, but the pivotal $1050 support has held thus far.
Today the focus will be on the release of the BoE Minutes from their most recent meeting, and as with previous editions, all eyes will be looking to the result of the votes on QE going forward. The direction of GBP from here hinges pivotally on whether additional stimulus is deemed to be necessary, and if we see a 9-0 vote in favour of no further expansion to QE then it is likely we see a further aggressive unwind of GBP shorts. In contrast, any indications (such as a split vote) that the MPC are contemplating more QE in November could very easily take GBPUSD back down to 1.6000 levels.
The slew of better earnings yesterday demonstrated limited effect on risk sentiment and therefore FX markets, but for what its worth today will be just as packed on the release schedule; main names to look for include Morgan Stanley, Wells Fargo and Boeing.
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